CASE 2

*TABLE: Risk Exposure — Internal Controls

1)​ Unauthorized Purchases
a)​ Require departments to submit purchase requisitions for needed goods, which
must be approved by a designated authority before a purchase order is created.
b)​ Implement a system where purchase orders exceeding a certain amount require
approval from a manager.
2) Lack of Competitive Bidding
a)​ Require purchasing agents to obtain quotes from multiple vendors for significant
purchases.
b. Maintain an updated price list for frequently purchased items to ensure prices are reasonable.

3. Theft of Inventory
a.​ Separate the functions of ordering, receiving, and storing inventory
b.​ Conduct periodic physical inventory counts and reconcile them with the inventory
records to detect any discrepancies.

4. Payment for Goods Not Received

a.accountant matches the vendor invoice, purchase order, and receiving report before
authorizing payment.

5.Errors in Invoice Processing

a.Use an automated system to track invoices, including due dates, payment status, and any
discrepancies.

6. Loss of Documentation
a.Implement a system for storing digital copies of invoices and other supporting documents.

CASE 3

The internal control weaknesses in the fixed assets system of Lockdown Anti-COVID
Corporation could lead to financial discrepancies and inefficiencies. One major issue is the lack
of proper approval and documentation process when machinery is received and put into service.
The information about equipment is only communicated verbally from Jennie to Rose, which
increases the likelihood of errors and miscommunication. Additionally, the absence of regular
physical inventories and tracking of serial numbers means that many items cannot be matched
to the company's official records, which could result in obsolete or lost assets not being
accurately accounted for. Allowing production employees to remove parts for personal use have
a significant risk of asset misappropriation, leading to potential financial losses for the company.
 To correct these weaknesses, the company can implement a more structured internal
control system. First, formal documentation should be introduced for each request and receipt of
equipment, in order to create an audit trail for all transactions. Second, the company could
conduct more frequent physical counting of inventories on an annual basis, to ensure the
accuracy of asset records. A more comprehensive tracking system for serial numbers should
be established to make it easier to match items with their corresponding records. Lastly, strict
policies should be enforced regarding the removal of parts for personal use, possibly integrating
regular audits to avoid any unauthorized actions. Implementing these measures will enhance
accountability, reduce risks, and provide a clearer picture of the company’s fixed asset
management.

CASE 4
### Project Plan for Improving Internal Control Procedures over Cheque Payments and Petty
Cash

**Inputs:**
- Current cheque signing procedures
- Existing petty cash management policies
- Staff training on internal controls
- Risk assessment of current processes
- Access to financial records and transaction reports
- Input from finance and accounting staff

**Activities:**
1. **Assessment of Current Procedures:** Conduct a thorough audit of existing cheque payment
and petty cash processes to identify weaknesses and risks.
2. **Development of New Policies:** Create robust internal control procedures for cheque
signing, ensuring dual authorization for payments above a certain threshold.
3. **Petty Cash Management Improvements:** Implement a system requiring detailed
documentation and regular reconciliations of petty cash disbursements.
4. **Training Sessions:** Organize training for all relevant staff on new policies and procedures.
5. **Monitoring and Evaluation Plan:** Establish a regular internal audit schedule to review
compliance with new controls and procedures.

**Outputs:**
- Revised cheque signing guidelines
- Updated petty cash management policy
- Training documentation for staff
- Internal audit report templates

**Outcomes:**
- Improved oversight of cheque payments resulting in reduced risk of fraud or errors.
- Enhanced accountability in the management of the petty cash fund, leading to more efficient
operations.
- Increased staff awareness and knowledge of internal control procedures, fostering a culture of
compliance within the organization.

### Evaluation Plan

**Outcomes:**
- Reduction in discrepancies in cheque payments and petty cash usage.
- Increased number of staff adhering to internal control procedures and policies.

**Indicators:**
- Number of unauthorized or fraudulent payments occurring before and after implementation.
- Frequency of petty cash discrepancies identified during reconciliations.

**Sources/Methods:**
- Monthly internal audit reports will be generated to evaluate adherence to new procedures.
- Staff surveys post-training to assess understanding and compliance with internal controls.

**Source of Information:**
- Internal financial records (cheque registers, petty cash logs).
- Audit findings from the finance department.
- Staff feedback forms from training sessions.

**Tool/Instrument Used:**
- Internal Audit Checklists.
- Training evaluation forms.
- Financial reporting and reconciliation templates.

**Frequency of Collection:**
- Monthly for internal audits and reconciliations.
- Quarterly for staff training evaluations and compliance assessments.

Implementing this project plan and evaluation strategy will ensure Quicksand Company can
effectively improve its internal control processes and mitigate risks associated with cheque
payments and petty cash management.